DigitalBridge's Surging Stock Amid SoftBank Acquisition Talks: Undervaluation or Speculative Overreach?

The recent announcement that SoftBank Group has agreed to acquire DigitalBridge for $4 billion has sent ripples through the digital infrastructure sector, triggering a 9.7% surge in DigitalBridge's stock price on December 29, 2025, closing at $15.27 per share. The deal, which values DigitalBridge at $16.00 per share-a 15% premium to its prior close-has sparked a debate among investors and analysts: Is this rally a correction of a long-term undervaluation, or does it reflect speculative overreach in a sector already grappling with inflated metrics?

Strategic Rationale: SoftBank's AI Ambitions

SoftBank's acquisition of DigitalBridge is framed as a strategic move to accelerate its ambitions in artificial super intelligence (ASI). By acquiring DigitalBridge's global portfolio of data centers, cell towers, and fiber networks, SoftBank aims to bolster its infrastructure for "AI at scale," a critical component for next-generation applications. This aligns with broader industry trends, as AI workloads increasingly demand robust, low-latency connectivity and distributed computing resources. According to a report by SoftBank, the acquisition is expected to close in the second half of 2026, with the company emphasizing its commitment to "scaling AI deployment" through DigitalBridge's assets.

Valuation Metrics: A Tale of Two Narratives

While the strategic logic is compelling, DigitalBridge's financial metrics tell a more nuanced story. As of late 2025, the company's trailing price-to-earnings (P/E) ratio stands at 136.7x, far exceeding its peer group average of 16.2x and the broader Capital Markets industry average of 25.3x according to valuation data. Its forward P/E ratio, though more moderate at 8.29, is not indicative of long-term sustainability. Meanwhile, the company's enterprise value-to-EBITDA (EV/EBITDA) ratio is a staggering -547.6x, reflecting significant challenges in profitability.

Analysts have raised concerns about the disconnect between DigitalBridge's valuation and its fundamentals. A valuation model using the Excess Returns approach suggests the stock is overvalued by up to 147.8%, as it projects sub-par returns relative to the cost of equity. Furthermore, DigitalBridge's price-to-sales (P/S) ratio of 29x-a 155% increase over six months-indicates a premium valuation not fully supported by revenue growth.

Market Optimism vs. Institutional Confidence

Despite these metrics, institutional investors have shown confidence in DigitalBridge's long-term strategy. The company recently secured $11.7 billion in new capital for its DBP III fund, signaling strong demand for its infrastructure investments. This contrasts with its public market performance, where the stock has delivered a negative 45% return over five years according to market analysis. Analysts' price targets for the next 12 months range from $16.00 to $23.00, suggesting a modest premium to the current price but not a dramatic re-rating as reported in valuation data.

The acquisition by SoftBank, however, introduces a new dynamic. By offering a 50% premium to the unaffected 52-week average price, SoftBank is effectively betting on DigitalBridge's potential to unlock value in the AI era, even if its current earnings do not justify the valuation. This raises the question: Is the market's optimism about AI-driven infrastructure demand sufficient to justify the surge, or is the rally driven by speculative momentum rather than fundamentals?

Conclusion: A High-Stakes Bet on the Future

DigitalBridge's stock surge reflects a collision of two narratives: the strategic imperative for AI infrastructure and the company's historically undervalued public equity. While SoftBank's acquisition validates the long-term potential of DigitalBridge's assets, the financial metrics suggest that the market is pricing in aggressive growth assumptions. For investors, the key risk lies in whether the company can translate its infrastructure holdings into sustainable profitability. If AI adoption accelerates as expected, the current valuation may prove justified. However, if the sector faces headwinds-such as regulatory challenges or slower-than-anticipated demand-the rally could be seen as speculative overreach.

In the interim, the acquisition serves as a case study in how strategic partnerships can temporarily decouple stock prices from fundamentals, offering both opportunity and caution for market participants.